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India, Singapore Exchanges Revive Talks as Regulators Intervene

(Bloomberg) -- India and Singapore regulators intervened to urge two of their squabbling exchanges to come to an “amicable resolution,” spurring some optimism about an end to a dispute which has left investors without an easy way to hedge risks in one of Asia’s largest markets.

The National Stock Exchange of India Ltd. and Singapore Exchange Ltd. “would carry out necessary discussions to come up with a solution that is acceptable to both the parties,” the Securities & Exchange Board of India and the Monetary Authority of Singapore said in a joint statement late Wednesday. About 10 minutes later, SGX said it has resumed talks with NSE on a potential collaboration for a trading link in Prime Minister Narendra Modi’s home state in Gujarat.

The regulators’ move is the latest effort to resolve a quarrel that erupted earlier this year, after the Singapore bourse announced plans to launch single-stock futures based on some of India’s largest companies. Tensions escalated when NSE sued SGX after cutting off licensing ties.

“This is a positive step considering the negative impact on the India capital markets from the earlier dispute over data and licensing rights,” said Michael Wu, a senior equity analyst at Morningstar Inc. in Hong Kong.

As well as leaving investors without a convenient way to hedge against Indian risk, the dispute prompted index giant MSCI Inc. to weigh placing caps on India and other emerging markets for limiting investor access. That underlined the threat to Indian markets posed by the falling out between the exchanges.

"It will be a loss of opportunity for India if things don’t work out,” said Chokkalingam G, managing director of Mumbai-based Equinomics Research & Advisory Pvt. “The whole world is globalizing and all financial markets have to globalize over time."

An earlier attempt to resolve the dispute between SGX and NSE’s index company India Index Services and Products Ltd. via arbitration proceedings will be deferred, according to the SGX statement. An order extending an 18-year old licensing agreement between the two exchanges for NSE’s benchmark Nifty contracts beyond August, and for at least two months after the end of arbitration, remains effective.

SGX shares rose 0.7 percent to S$7.57, heading for the biggest gain since July 13.

“Discussions between SGX and NSE revive hopes for cooperation on Nifty-based futures products,” said Sharnie Wong, a Bloomberg Intelligence senior industry analyst, who estimates that the contracts accounted for 9 percent of SGX’s derivatives trading volume in its fiscal third quarter.